An Eritrean man shows the wounds he says traffickers inflicted on him in Egypt’s Sinai Peninsula to force him and his relatives to pay ransom for his release. Photograph: Tome Dale for HRW

Hundreds of Eritrean refugees have been enslaved in torture camps in Sudan and Egypt in the past 10 years, enduring weeks or months of violence and rape and extorted by traffickers often in collusion with state security forces.

Some of the refugees have died, and many have been scarred for life – both physically and psychologically – as a result of mutilation, burning, beatings and sexual assault, according to dozens of testimonies collected by Human Rights Watch in a report published on Tuesday.

Traffickers demand ransom money to halt the torture, either from the refugees or from their relatives, who are forced to listen to their loved ones screaming down telephone lines. Even after money has changed hands, traffickers sometimes sell refugees on to another group rather than release them.

The 79-page report quotes a 23-year-old Eritrean man who was kidnapped by traffickers in Sudan in 2012 and handed over to Egyptian traffickers in the Sinai desert. "They beat me with a metal rod. They dripped molten plastic on my back. They beat the soles of my feet and then they forced me to stand for long periods of time, sometimes for days. Sometimes they threatened to kill me and put a gun to my head," he told HRW.

"They hung me from the ceiling so my legs couldn't reach the floor and they gave me electric shocks. One person died after they hung him from the ceiling for 24 hours. We watched him die.

"Whenever I called my relatives to ask them to pay, they burnt me with a hot iron rod so I would scream on the phone. We could not protect the women in our room: they just took them out, raped them, and brought them back."

HRW also spoke to two traffickers, one of whom said he had made $200,000 (£120,000) profit in less than a year. "I know this money is haram [shameful], but I do it anyway."

His most recent group was four Eritreans, whose relatives were told to pay $33,000 each for their release.

"Sometimes I tortured them while they were on the phone so the relatives could hear them scream. I did to them what I do to everyone, I beat their legs and feet, and sometimes their stomachs and chest, with a wooden stick. I hang them upside down, sometimes for an hour. Three of them died because I beat them too hard. I released the one that paid."

According to HRW, more than 200,000 Eritreans – most of them Christians - have fled repression and destitution since 2004. Some of those quoted in the report said they paid people smugglers, but were sold on four or five times to different traffickers.

Until recently, many were heading to Israel until a new 240km (150 mile) steel border fence blocked access from the Sinai desert.

"Over the past three years, Sinai has increasingly represented a dead-end comprised of captivity, cruelty, torture and death," the report says.

Some refugees have been forced to work for traffickers, as builders or domestic servants. One Bedouin leader in the Sinai, Sheikh Mohamed, told HRW: "I know of hundreds [of Eritreans] at this very moment who are forced to work on construction sites. They are building houses for the kidnappers, who pay for the construction materials with the ransom money."

In June last year, the US state department reported that "human trafficking, smuggling, abduction, torture and extortion of migrants" in the Sinai was increasing. Victims were "brutalised, including by being whipped, beaten, deprived of food, raped, chained together and forced to do domestics or manual labour at smugglers' homes".

Collusion between traffickers and Sudanese and Egyptian police and military is widespread, according to HRW, which says both countries are breaching their obligations under national and international anti-trafficking laws, international human rights law and national criminal law.

Gerry Simpson, the report's author, said: "So far, police and soldiers in Sudan and Egypt helping traffickers kidnap and torture refugees have nothing to fear. Some police in eastern Sudan are so emboldened by their impunity, they hand refugees over to traffickers in police stations."

Some security officials in Egypt "even return escaped trafficking victims to their captors in Sinai", he added.

"The time has long passed for authorities in both countries to arrest and prosecute traffickers for these terrible crimes, and to have zero tolerance for security officials colluding with them."

Egypt had prosecuted one trafficker and no security officials up to December 2013; Sudan had launched 14 prosecutions of traffickers and four of police officers in connection with trafficking and torture.